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Mitigation Monday – Coming to Grips with a Global Pandemic

The Futures are all over the place.  

On Friday, we mitigated much of the damage as rumors spread that the Fed was going to save us but the Federal Reserve can't stop the economy from grinding to a halt as people avoid movies, restaurants, crowded workplaces and even supermarkets that don't have face masks – which is now the hottest selling item in the World (even though they don't really help).

The global death toll jumped from 2,871 Friday afternoon to 3,048 with 89,197 now infected (up 5,000) with 4,335 in South Korea (up 85%), 1,694 in Italy (up 90%), 978 in Iran (up 152%) and now 130 in France, 130 in Germany and 86 in the US.  And we are still NOT testing people.  There simply aren't any kits so we have NO IDEA how many cases there are in the US.

All in all, there are now 9,000 cases outside of China, where the virus is somewhat contained though it is possible the Chinese Government is lying in order to get the people back to work and, frankly, it's a very tough choice the Government has to make since it's planting season and, if they fail to plant crops, then people will starve in the Fall in much greater numbers than they would be likely to die of the virus – so it is better for the people to go back to work and risk getting sick – China just doesn't trust them enough to tell the people the truth of the situation.  

Dale Fisher, a professor at National University of Singapore who specializes in infectious diseases, said the outbreak will continue globally unless more countries take a stricter approach to finding all the individuals who had contact with infected people. In places with a large number of cases, they may have to take extreme measures and quarantine large areas, he added.

“If you do nothing you’ll get another Wuhan,” said Dr. Fisher, who also heads the World Health Organization’s global outbreak alert and response network.

You're not hearning about this because your own leaders don't trust you with the truth either.  The message from the Trump Administration is that this is "no big deal" and you should get back into the market because the Fed will fix everything – it's the same message we got early in 2008 – from the same people (Kudlow, Cramer), in fact!  

Don't think your Government and the media won't lie to you in a time of crisis – clearly they will!  

China's Caixin Manufacturing Index fell to 40.3 (serious contraction) in February – a record low not even touched during the Financial Crisis 10 years ago.  China’s official National Bureau of Statistics manufacturing gauge earlier showed the steepest monthly contraction on record.  The Caixin numbers show production, new orders and staffing levels all falling at the fastest pace in the survey’s history, as manufacturers heeded the government’s call to extend their Lunar New Year shutdown to contain the spread of the virus.  “The supply and demand sides both weakened, supply chains became stagnant and there was a big backlog of previous orders.

Meanwhile, the OECD says Global Growth will slow sharply, putting the Global Economy at risk of recession with the "best case" forr the year now at 2.4%, down from 2.9% projected just a month ago.  That's $400Bn shaved off by the OECD but my own projection is for an even Trillion to be lost – well under 2% – so we'll have to wait for those revisions.  “It’s not like it plunges and then it recovers quickly,” said Laurence Boone, the OECD’s chief economist. 

For the U.S., the OECD sees a very slight slowdown this year, with gross domestic product expanding by 1.9% as against a previous forecast of 2%.  In Italy, the European country with the largest number of victims as the month of February ended, the OECD doesn’t expect to see any growth this year, having previously forecast an increase in GDP of 0.4%. But as with China, it expects to see a recovery in 2021, with growth still projected at 0.5%.

We get a peek at our own manufacturing numbers with the Fed's Beige Book on Wednesday and we have PMI and ISM this morning after the bell and an incredible amount of Fed speak with 11 scheduled spots, 6 of them on Friday as we certainly can't afford for this week to end like last week – can we?

Still plenty of earnings coming in as well:

Image

 


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  1. The volume bars are hiding the actual trading bars lol!


  2. But hey, no need to try to fix healthcare:

    Image

    The average family can't afford to live anymore – and healthcare and education are the problem. Nothing that a pandemic can't fix. Or another round of tax cuts. The average family got $40 last time…


  3. I'm sorry, but someone is lying about this virus.  Things just don't add up.  The published death rate is rather low.  I agree with Trump, with the data provided this is way overplayed.  We are getting worked up over something a little more fatal than a bad flu season or governments are lying.  True, a severe flu can lead to a lot of workers calling in sick, etc. but so what?

    Finally, the masks don't block particles, but they do keep you from touching your face which may be critical.  This is where we need more data.  Some viruses are rather hearty and can live on surfaces for a week or more!  That means someone can sneeze and get some fluid on their hand, touch a door knob and be giving a virus away for upwards of a week!  Is that what the panic is here?  Is this virus a strong, longer living one?  This happens in other viruses as well.  For example, HIV doesn't live very long out side the body, but Hep C can (IIRC a day or two). 

    Sorry for the rant, but something about this stinks to me.  We are getting lied to someplace.


  4. Coronavirus: Well it depends on how you calculate the mortality rate. For completed pandemics the way it's calculated is deaths over total cases. But when it's underway, it is possibly more appropriate to calculate it as deaths divided by the sum of deaths plus recovered. If you do it that way the mortality rate is closer to 7%. Then there are bound to be some cases where symptoms were mild, no testing done as the person doesn't show up in the statistics – like the flu. But this virus seems to be between 20 and 70 times greater than the flu. So for Trump to say it's no big deal is currently true but that's not likely to remain the case. We've got Italy, now alarmed at their statistics, changing their testing protocol to reduce the number of positive tests – which is going to result in a massive spike in spread because they are just burying their heads in the sand. China and Iran are probably just blatantly lying. The only place that has significant numbers of cases where I think you're still seeing real numbers – at least to the best of their ability – is South Korea, where cases are jumping 25% per day. 

    If China is lying and they don't actually have it under control even after the authoritarian steps they've taken, what chance does Europe have to keep it from becoming a full-blown epidemic?None, and they might not have a prayer even if China is being truthful because Europeans are not going to be as easily locked down as the Chinese. 

    Hate to be doom and gloom but capital preservation is the order of the day IMO 


  5. danosu77,

    Good points but this Virus is serious. You simple have to work out the expantion on the old chessboard and doubling up on rice corns (virus) In Germany we reported 2, 14 days ago today 150. Do not like to mention Italy.

    Many supermarket shelves in Germany are empty. Possible just panic?????


  6. Good Morning!


  7. Yodi – exactly. Preservation of capital might be the least of our worries if there is nothing to eat. Time to start stocking up before the panic gets here. 


  8. The Bug/Danosu77 – what makes you think we're being lied to?

    If anything, the death rates are high because the denominator is low. Typically in an outbreak, early reports are by clinicians, who treat people with some new disease in their hospital, and then will report something like "We saw XX patients in our hospital in the ICU, and XX% of them died". That was in fact exactly what the first MERS reports looked like, with a 68% fatality rate, IIRC. The mild cases of MERS were certainly not in the ICU, not even in the hospital. So the denominator is a problem.

    Masks I'm totally against. There's a piece circulating written by some virologist that says masks keep you from touching your face. Well, yeah, but masks get cruddy, too, have to be washed or changed, and make you think you're protected when you're not, so you think it's okay to go to work or church or whatever.

    What works in this situation is staying home. Even if you think it's just a cold, even if you're a really important person, stay home.

    The next couple of weeks, IMHO will be crucial for the US. Compared with Korea, the US has a very low supply of test kits and expensive medical care. There is also virtually no sick leave in the US -although Korea's not so good about that either, and many people lose their jobs if they take a day off. This is a structure that can lead to a very bad outbreak that may go undetected because the US CDC is underfunded.


  9. From what we have seen, this is not an human race extinction event with the current mortality rate, but this does have the potential to have a huge impact on the economy and we don't have a lot of visibility there.


  10. Corona, I think the important issue that I've taken away from all the coverage is that it spreads very quickly. That is why there is such an effort to contain it. Imagine the world shutting down for a few months due to 50 million plus infected. The other unknown is treatment and vaccine timeline.


  11. The Bug – the interesting part of the puzzle is that respiratory infections that spread easily are almost always upper respiratory infections -  and therefore much milder than lower respiratory infections. So the pulmonologists and so on are  puzzling over what initially looked like a higher than expected severity of illness for a rapidly spreading disease. However, as the data roll in, it's looking much more like the usual "old people with pre-existing illness" are those who have problems.


  12. FWIW

    With this volatility,  I've been trading the /MNQ instead of /NQ.  Each contract is 1/10 of a /NQ contract.

    Buying 10 or 20 of these as opposed to 1 or 2 /NQs offers much more flexibility for scaling in and out.


  13. The data I have reviewed from some sources shows a wide disparity in mortality depending on where in China one was infected.  This COULD be related to disparity in care in various regions – of course other explanations are possible.  My gut tells me this is worse than it is and "they" don't want us to know, but I don't have any evidence to support this belief.  

    In terms of masks, yet they can become dirty, but they keep you from touching the face which can help with transmission.  The reminder can be helpful.  

    I need to watch Alex Jones today and see what he thinks!


  14. US / Snow – You bring up good points. I was having a discussion yesterday with some friends and what worries me about the US is that you have people without insurance and/or sick leave that will not see a doctor because they can't afford it and won't stop working because they can't afford that either! So, how do you control the spreading with these factors. Not as much of a problem in Europe for example.


  15. VIX – sitting at 39 – I'm tempted to look at some putters, however I'm going to stand pact on this for now.



  16. green market means get into shorts now!


  17. Italy, Europe’s Coronavirus Lab


  18. One of Australia’s most popular Chinese restaurants COLLAPSES


  19. The Bug/danas – when you review data from various sources, get the raw data – not the rates, but both the numerator and the denominator. The denominator especially is problematic, although even in the numerator there are people dying from other pneumonias, or dying _with_ COVID-19 rather than _of_ COVID-19.


  20. Phil,

    Any suggestions/adjustments on the Dec 2020 MIDD 3 positions but especially the Dec 2020 MIDD sold 110 Puts? Thanks.


  21. Good morning!

    Holy crap that Big Chart looks ugly!

    Covering/StJ – The trick is to die before you run out of credit…

    Death Rate/Dano, Dawg – That's what I said, people keep dividing by the number infected which is clearly the wrong way to do it when in progress – that's what worries me, the "cover up"ishness of the whole thing is very disturbing.  

    And what StJ said!

    Panic/Yodi – The panic can be worse than the virus.  Italy will be a good test for what happens in a country you can't control like China.  The spread in SoKo is alarming but possibly because of the cult so we're looking for natural spreads – whatever that is – to see how this is likely to play out globally.  

    Death Rate/Snow – That's possible too as it's the more serious cases we see first where 500,000 people could have had a mild case, got better and never got tested.  Clearly we don't know and, as you say, underfunded and unprepared is not a good way to start things off in the US.  Fortunately, Mike Pence is in charge…  cheeky

    MIDD/Scout – It's a little early to adjust it as we don't know how much or how long of an affect the virus will have.  We liked MIDD as they seemed to be getting a contract with MCD to put in ovens and they just had nice earnings on 2/26 but they warned of possible virus issues and people panicked.  

    MIDD Long Call 2020 18-DEC 100.00 CALL [MIDD @ $107.22 $-4.59] 10 1/23/2020 (291) $17,700 $17.70 $-1.75 $17.70     $15.95 - $-1,750 -9.9% $15,950
    MIDD Short Call 2020 18-DEC 120.00 CALL [MIDD @ $107.22 $-4.59] -10 1/24/2020 (291) $-9,900 $9.90 $-3.25     $6.65 - $3,250 32.8% $-6,650
    MIDD Short Put 2020 18-DEC 110.00 PUT [MIDD @ $107.22 $-4.59] -10 1/21/2020 (291) $-10,000 $10.00 $3.70     $13.70 - $-3,700 -37.0% $-13,700

    We have a pretty conservative spread and there are no longer options to roll to so I'm not inclined to make a move yet but, if we can buy back the short calls for less than $5 (up 50%), that's something we might do and wait for a bounce to sell more.  


  22. I watched the local news and people were at Costco hoarding toilet paper. You can't eat toilet paper. You can, however, wash your rear in other ways. People are odd!

    For my part I did buy 100,000 calories worth of rice for $100. So I guess I'm a prepper now!


  23. I am actually pretty satisfied with the stress test we went through with my VXX trade. VIX got close to 50 which is still a super rare occurrence (4 times in the past 20 years) and that didn't have any sizable impact on the account. Clearly, you need some spare margin and limit the position size, but it was pretty uneventful overall.


  24. AAPL is up $18 today, that's 150 Dow points by itself.  It's accounting for most of the Nasdaq's gains too.

    Prepping/BDC – I live in a town with lots of restaurants – we can always go looting if things get bad.  cool

    Stress Test/StJ – Yes, I think our portfolios held up well, which means we can get more aggressive.  

    I'll have to finish going over the Watch List.


  25. unless there's a super-quick cure/vaccine announced the longterm market is bearish for the next 18 months. You can comfortably go short on any 1 or 2 day uptrend


  26. VIX > 34 not a buy sign


  27. BND at 86.80 not a buy sign (for stocks)


  28. Mortgage – I saw a 30 year fixed at bankrate.com down to 3.00%, though there wasn't a lot of options this low. I'm wondering if people are thinking about where rates might be in 6 months. Refinancing a mortgage down can be very helpful on interest expense, and lower cash flow by even more by resetting the 360 month term.


  29. /YM – double top forming at 26150. if it pass back under 26000 may have to short it.


  30. AAPL has retraced "all the way back" to where it was…. at the beginning of this year. Wow, what retrace. That'll show people!


  31. More quick summaries from the watch list:

    • BCS – Not in love with them, can't get a clear line on financials  - 4 
    • MU – Didn't come down much – 5 
    • FCX – Love them below $10 and they have gold – 8 

    • PRU – Too worried about business interruption claims and weather claims.   Very good price though and 6% dividend  – 6
    • SNP – Not China Petroleum – 3
    • LEN – Didn't come down enough – 4 
    • KHC – My old favorite back where we started at $25 – 8

     

    • UBS – I'd rather take a chance on them than BCS. – 8 

    • CBC – VIAC now and we own them. – 9

    GS – A good price for them but not super-cheap – 5 

    • COF – Not excited by them – 5 
    • MET – A bit worried about life insurance and low returns on their reserves (bonds) so pass – 4
    • MFC – More life insurance, same problems – 4 
    • LYG – Too risky.

  32. $260 did not last long for AAPL.

    More Watch List:

    • X – Assuming we survive, very cheap – 8 

    • M – Crazy cheap – 9 

    • F – Big China trouble that may spread – 6 
    • MYL – Tricky as they are merging with PFE's Upjohn Division but a good price for MYL at $17 – 8

    • ECA – Not in this environment – 4
    • ADS – Too much turmoil – 4 
    • TECK – Good time for basic resources on sale – 7


  33. Phil,

    Please help me, how do I determine if today is a strong or weak bounce?  Which high, which low and then what % do I want to see?

    Thanks!


  34. More Watch List:

    • STLD – Too cheap to ignore down around $25 – 8 

    • NRZ – $2 dividend makes them a 9!  

    • GPS – Only because they are so cheap do I like them – 8

    • LB – Love them but no longer cheap – 6
    • HUN – I love it when boring companies go on sale – 8 

    • GT – At this price ($9.50), I like them as you can make them much cheaper with options – 8

    • UTHR – Not on sale enough but a well-priced Biotech – 7 

    • TWO – Nice sale on a 12% REIT – 8 

    • AGNC – Ditto – 7 

    • PK – Tempting but too many issues with travel at the moment – 5 
    • BSM – Interesting as they just manage the reserves.  Great entry price for the long haul – 8

    • HFC – Low-cost, small refiner – 8 


  35. Bounces/Dano – We usually want to see moves from consolidated tops to consolidated bottoms but, with quick moves like this week – we can go spike to spike too.  

    The S&P, for example, fell from 3,400 to 2,900 so 500 points and a bounce is 20% of the drop so 100 points so 3,000 is a weak bounce and 3,100 is a strong bounce.  I tend to code green for over, black for close to the line and red for under.

    The Dow was 29,500 to 25,000 so 4,500 would be 900 but we'll call it 1,000 as it's not an exact science and 100 points on the Dow is 10 seconds these days – and the Dow loves round numbers.  So 26,000 is weak and 27,000 is strong. 

    Nasdaq fell from 9,600 (because 8,000 is the base so it's the 20% line and that overrules any other spike around it) to 8,400 because we have 400-point lines working so 8,800 is weak and 9,200 is strong.  8,400 is the weak bounce line off 8,000.  

    Russell 1,600 is the main line and 1,400 is strong support so that's the range but we fell from 1,700 back to 1,450 so 250 means 50-point bounces to 1,500 (weak) and 1,550 (strong) 

    So no strong bounces have been taken and we're barely at the weak bounce lines AND it's a MONDAY – not a good thing to react on.


  36. Bounces/Phil, Danosu77
    Hi Phil,

    I've been wanting to understand your 5% rule for some time now, so thanks for answering Danosu77's question in detail.  I understand what you said about the S&P 500, the Dow, and the Russell, but have some questions about what you said about the Nasdaq.

    You said, "Nasdaq fell from 9,600 (because 8,000 is the base so it's the 20% line and that overrules any other spike around it) to 8,400 because we have 400-point lines working so 8,800 is weak and 9,200 is strong.  8,400 is the weak bounce line off 8,000."

    I get that the gist is, divide the total drop by 5. I get 400 if I divide (10,000 – 8,000) by 5. Can you say a little more about why we're using 10,000 and 8,000 instead of say, 9,700 and 8,200? These last two numbers would give us 300, not 400. I'm good with rounding and rules of thumb and approximations. I just want to know a little more about how you are thinking in this case.

    Thanks.


  37. there's that cross below 26000 you were looking for


  38. Phil – what about on WBA?


  39. Untradable with 100 point rips up and down on every 5 minute bar 


  40. /YM Bertil – I've been trying to catch a good wave but it's too choppy. Whiplash headfakes whatever you want to call it. Tight hard below and fairly tight trailing stops for 50 points here and a 50 points there. Serious pain in the ass to trade. 


  41. Nasdaq/Saguaro – I'm not going by the range of the drop on the Nas.  It's been crazy volatile so the range I'm watching there is the 5% lines off 8,000 which are 400 points each so 7,600, 8,000, 8,400, 8,800, 9,200, 9,600 and 10,000.  What the Nas does in the shorter-run is not that meaningful.

    Of course you could zoom in and play the 9,700 to 8,200 drop and that's 1,500 point so 300-point bounces to 8,500 (weak) and 8,800 (strong) so, either way, 8,800 is a very significant line.

    So, in the bigger picture, we have big consolidation at 8,000 prior to a 20% run to 9,600 – the small overshoot doesn't matter.  At the 8,000 line, I'm more concerned about the 5% lines, which are 400 points each to 10,000 than I am about short-term gyrations but this rejection at the 20% line at 9,600 took us all the way back to the weak bounce line at 8,400 and we have to see 8,800 (strong) retaken to call the Nas back on the path to 10,000.  Failing that and we're much more likely to test 8,000 again.

    WBA/Coulter – I love them down here.  We already have them.

    WBA/Winston – I think this might be a chance for us to add them in the new portfolios. The "disappointment" is $1.37/share vs $1.41 expected though 2020 guidance remains at $5.93 per $55 share with Retail Pharmacy Sales up 1.6%.  Though Gross Profit is down 5.2% from last year in a tougher environment, it's already been offset by cost savings so Net Profit is overall flat. 

    I think $60 is the right target for WBA so we'll let them find a floor and then make a post-earnings play though I'm keeping an eye on the 2022 $50 puts as they are almost $6 for a net $44 entry, which would put the p/e below 8.

    WBA definitely belongs back in the LTP so let's:

    • Sell 10 WBA 2022 $45 puts for $7 ($7,000) 
    • Buy 20 WBA 2022 $40 calls for $9.65 ($19,300)
    • Sell 10 WBA 2022 $55 calls for $4.50 ($4,500)

    That's net $7,800 on the $30,000 spread so the upside is $22,200 (284%) but lots of room to sell calls on a bounce or, if things do get worse, we can sell more calls and roll the $40s lower.  Lots of options.

    Untradeable/Bert – Best to watch and wait on a bounce day like this.  I know it feels like we're missing out but so many times these are just head-fakes.   

    A lot of volume today (174M) but only 1/2 of Friday so don't want to read too much into the bounce.  


  42. China leads gains in Asia on stimulus bets

    • Major markets in Asia attempted to bounce back Monday after sharp losses last week, with the Shanghai Composite closing the session up 3.2% as investors pinned their hopes on a wave of central bank stimulus.
    • That would help cushion the economic hit from the coronavirus outbreak, which battered China's factory sector in February.
    • Fresh data showed Markit/Caixin's China manufacturing PMI dropping to 40.3 vs. 51.1 in January, while the official PMI from the National Bureau of Statistics slipped to 35.7 – the lowest level on record.
    • Nikkei +1%; Hang Seng +0.8%; KOSPI +0.8%; Sensex +1.7%
    • President Trump calls the Fed "slow to act" and contends that the U.S. should have the lowest interest rate "for all of the right reasons."
    • Notes that "Other Central Banks are much more aggressive" and says the U.S. central bank's failure to follow them put the U.S. at "a competitive disadvantage."
    • "We should be leading, not following!" he tweeted.
    • Treasury rally continues, pushing 10-year yield down 9 basis points to 1.065%; the yield is up, though, from 1.031% touched earlier.
    • iShares 20+ Year Treasury Bond ETF (TLT +0.7%), ProShares UltraShort 20+ Year Treasury ETF (TBT -1.4%).
    • U.S. Dollar Index falls 0.7% to 97.46; Invesco DB USD Bullish ETF (UUP -0.5%).
    • It's not quite as dramatic as the Friday statement by the Fed's Jay Powell and last night's similar action from the BOJ's Kuroda, but ECB Vice President Luis de Guindos says Europe's central bank "stands ready" to act as necessary to combat any virus-linked slowdown.
    • It prompts only one question: "Is Lagarde on vacation?"
    • A quick check on rates finds them falling throughout the West, except for Italy. The 10-year yield in Germany is now -0.656% (not a typo), in Spain is 0.28% (not a typo), and in the U.K. 0.40%. Italian 10-year yields are up another 5.4 basis points to 1.175%. In the U.S., the 10-year yield is threatening to fall below 1% for the first time ever, currently at 1.06%.
    • There's been plenty of chatter over the weekend about a three-way coordinated central bank move early this week. So far, it's only talk.

    • The eurozone's third-largest economy is injecting €3.6B into its economy to mitigate the largest outbreak of coronavirus in Europe.
    • Tax credits will be introduced for companies that reported a 25% drop in revenues, as well as tax cuts and extra cash for the health system.
    • The package will amount to 0.2% of GDP, and would come in addition to €900M worth of measures unveiled on Friday for the most severely hit regions.
    • FTSE MIB +0.4% to 22,072.
    • Co-Diagnostics (NASDAQ:CODX) is poised to add to its torrid pace with its announcement that its coronavirus virus test kits are now available for purchase by CLIA-certified laboratories who have yet to complete their Emergency Use Authorization submissions with the FDA. Previously, labs had to wait for agency sign-off before ordering.
    • Shares up 59% premarket on robust volume. If the premarket price holds, shares will be up 20-fold since mid-January.
    • Panera launches a new coffee subscription service at its 2.2K locations.
    • Loyalty program members can receive a free cup of hot drip coffee, hot tea or iced coffee every two hours during regular Panera hours, in addition to refills of the same drink at other locations, per an e-mail sent this morning by the company.
    • The unlimited coffee subscription costs $8.99 per month. If a customer went to Panera every day, the cup of coffee would work out to about $0.30 per day.
    • "We're changing the game for coffee drinkers across the country with our no compromises, unlimited subscription service — great coffee at an amazing value," says Panera CEO Niren Chaudhary.
    • The reaction of consumers to the program will be of interest to Starbucks (NASDAQ:SBUX) and Dunkin' Brands (NASDAQ:DNKN).
    • Panera is owned by JAB Holding, which is also the parent company for Peet's Coffee, Caribou Coffee, Krispy Kreme and Einsten Bros. Bagels.
    • February ISM Manufacturing Index50.1 vs. 50.4 consensus, 50.9 prior.
    • New Orders falls to 49.8 from 52.0.
    • Production at 50.3 down from 54.3.
    • Prices paid tumbles to 45.9 from 53.3.
    • Supplier Deliveries rose to 57.3 from 52.9.
    • Theme parks stocks are getting hammered again on concerns that spring traffic and season pass sales will be down due to the coronavirus outbreak.
    • SeaWorld Entertainment (SEAS -5.9%), Six Flags Entertainment (SIX -6.3%) and Cedar Fair (FUN -4%) are all showing losses steeper than the rest of the lodging sector.
    • Gold prices attempt to recover from their biggest daily decline since June 2013, as gold (NYSEARCA:GLD) apparently became the asset of choice for investors seeking to liquidate positions to meet margin calls in other assets.
    • April Comex gold +1.9% to $1,597.30/oz.; May silver +1.2% to $16.66/oz.
    • "We saw similar behavior during the 2008 financial crisis… and once investors understood and appreciated the scope of central bank stimulus coming down the pike, they began buying gold," says Gold Newsletter editor Brien Lundin. "The price more than doubled from the lows thereafter."
    • Also, "physical transaction in China and India are typically conducted face to face, and we anticipate that these transactions are going to plummet as the coronavirus crisis plays out," says Zaner Metals' Peter Grant.
    • "The major price slump at the end of last week was overdone," according to Commerzbank's Eugen Weinberg.
    • Unlike people and economies, gold is "immune" to the coronavirus, says Goldman Sachs head of global commodities research Jeff Currie.
    • Gold is the "currency of last resort and avoids the concern that paper currencies could be a medium of transfer for the virus," Currie writes. "As a result, gold has outperformed other safe haven assets like the Japanese Yen or Swiss Franc, a trend we see continuing as long as uncertainty around the full impact of COVID-19 remains."
    • Meanwhile, "silver is in even worse shape due to its industrial attribution and slack in industrial demand and fears of greater demand loss as the virus fears hit commodity and energy markets," says GoldSeek.com's Peter Spina.
    • Walmart (WMT +4.5%), Target (TGT +3.3%), Costco (COST +7.1%) and Dollar General (DG +2.9%) are all notably higher after U.S. consumers apparently spent the weekend stocking up on household essentials.
    • The rush to buy products in bulk seems to be also benefiting sentiment on Procter & Gamble (PG +2.1%), Clorox (CLX +6%), Colgate-Palmolive (CL +4.6%) and Kimberly-Clark (KMB +4.3%).
    • The companies themselves haven't been issuing sales updates to back up the anecdotal reports from the streets.
    • China iron ore futures hit the upside limit overnight as declining stockpiles at ports indicated steel mills' improving appetite for the material and expectations rose that the government would launch support for an economy that has ground to a halt.
    • Iron ore on the Dalian Commodity Exchange closed +5.8% at 653 yuan/metric ton ($93.70) after hitting the daily limit of 6%, and Singapore Exchange futures climbed as much as 5.6%.
    • Business restarts are progressing although still at a slow rate amid restrictions aimed at containing the coronavirus outbreak, and steel demand may pick up as expectations rise that China will roll out more stimulus measures after factory activity contracted at the sharpest pace on record last month.
    • Nomura analysts say they expect more easing measures over the coming months, but China's worsening balance of payments conditions and other factors likely will limit an aggressive rollout of stimulus measures.
    • World coffee exports fell 7.6% Y/Y to 10.29M bags in January, according to the International Coffee Organization.
    • Exports in the first 4 months of the 2019-2020 coffee year have decreased by 5.8% to 39.53M bags.
    • In January, the ICO composite indicator averaged $1.0689 per pound as prices for all group indicators fell.
    • iPath Series B Bloomberg Coffee Subindex Total Return ETN (NYSEARCA:JO) is up 3.26% on the day, but still trades in the lower half of its 52-week range of $30.68 to $45.60.
    • IMAX (IMAX +2%) says Chief Technology Officer Brian Bonnick is retiring after a 20-year tenure, and it's named Pablo Calamera to the position.
    • Calamera joins from the JW Player video platform, where he was also CTO. He had previously served in the same role for Vonage.
    • He'll drive technology strategy for the company, "overseeing the development and implementation of products that further evolve its theater network and extend The IMAX Experience to new platforms."
    • Goldman Sachs Group (GS +2%) becomes the latest investment bank to tell its employees to delay any non-essential international business travel, Reuters reports, citing a memo.
    • "Effective immediately, all non-essential international business travel should be postponed," the memo said.

  43. Big push up into the close – just to make sure you all get the message…

    I guess everything is fixed, right?


  44. Fooles rush in where angles fear to try!!!!!!


  45. This is since this morning!

    At 8:30 am

    "4,335 in South Korea (up 85%), 1,694 in Italy (up 90%), 978 in Iran (up 152%) and now 130 in France, 130 in Germany and 86 in the US."


  46. 2% drop in the Dollar is a really big help since Thursday morning.


  47. Dow +800 in just over an hour, now that's a bounce!


  48. Dow closes up 5%, biggest point gain in a day ever.  


  49. What was behind this rally today?  What is different than last week? 

    Looks like I picked the wrong week to stop sniffing glue…


  50. danosu

    Once again I was sniffing the wrong tube!  in one day, we have solved all the problems of yesterday.  I am staying mostly in cash.


  51. Did I miss something – a cure, a vaccine? Did the supply-chain disruption get fixed today?


  52. StJ – everything is perfect! Trump fixed everything! Didn't you know??


  53. AAPL – up 25. lints today – in the last hour went up 10 points – had a similar spike on Friday went up about 8 point in last 15 minutes.   This is crazy..  it's almost like there is a concerted effort to jack up markets.  


  54. from Forbes: (not exactly a liberal rag)

    "President Trump and his surrogates, including Mick MulvaneyDonald Trump Jr and Rush Limbaugh, continue to describe the virus as a hoax, make misstatements about the disease and its risks, falsely accuse political opponents of wanting the disease to spread, exaggerate any temporary success, dismiss future problems, ignore science and epidemiology, while claiming that the president is under-appreciated through political unwillingness to recognize his continuing success."


  55. TSLA FOMO back in effect too today and people chasing it after hours


  56. TSLA now up 20 points after close WTF


  57. Wow what a bounce.  I wouldn't be surprised if we bounced back to test the all time highs again by next week!


  58. Bounce – well 2% off the dollar is 40% of the bounce. My guess is that with the coronavirus numbers jumping like they are, going long anything right now (except Walgreen's lol) is a mistake. My spidey sense tells me this might be a bull trap.


  59. You mean regular people didn't decide to buy 5 million shares of Apple at 3:59


  60. Judging by the reaction CB signaling and rate cutting still works to nitro boost the market. I don't see why they don't just put the pedal to the metal and just floor it as hard as they can to see how high they can pump it.


  61. Yeah – I actually shorted a couple of big runners today…..  hope for a small pull back to take home some McMuffin change.


  62. The MAGA folks are going crazy over this huge rip in the market. Positively ecstatic. They've also bought into the idea that the coronavirus is either a hoax or just "the flu" 

    I have no doubt that Trump is taking this all in and learning his important lesson:  Boosting the market is the single most important mission in his life until the November elections, NOT containing the coronavirus. And he will do everything in his power to achieve it.


  63. More hoax

    Four more people have died of the coronavirus in Washington state, bringing the total fatalities to six, and local officials said they’re preparing to isolate large numbers of patients for what they anticipate could be a significant outbreak.


  64.  Batman, I need more than Mcmuffin change.  I need a Kia or Ford. 


    • The RBA cuts its benchmark lending rate by 25 basis points to 0.50%. Most had expected a rate cut, but long-term yields and the aussie (NYSEARCA:FXA) are both on the rise as ideas of a bigger move had crept into the minds of traders.
    • RBA Governor Philip Lowe minces no words, saying the action is in response to the coronavirus outbreak.
    • The ASX 200 (NYSEARCA:EWA) is up 1.4%
    • Hyatt (NYSE:H-1.4% after-hours, saying it is withdrawing its previous 2020 earnings guidance because of the coronavirus' impact on travel.
    • "This is an evolving situation, and our ability to assess the financial impact of COVID-19 on our business continues to be limited due to quickly changing circumstances and uncertain consumer demand for travel," CEO Mark Hoplamazian says.
    • Hyatt cites the spread of the outbreak spread beyond China as well as temporary travel restrictions imposed by many companies, resulting in lower near-term bookings and rising cancellations in North America and Europe that will impact its full-year outlook and earnings.
    • The coronavirus that has rattled markets will not stop copper prices from surging to $3/lb. this year, Chilean Mining Minister Prokurica tells Bloomberg.
    • Comex copper climbed as much as 2.4% today to $2.602/lb., lifted by the gradual reopening of factories across China and signs of coming support from central banks to recounter the economic fallout from the outbreak.
    • Copper prices "should stabilize once the coronavirus passes," Prokurica said. "Nobody has information to say that the coronavirus will last one or two or three months, but SARS… lasted between two and three months, so we think that is what will happen with the coronavirus."
    • No copper cargoes from Chile to China have been suspended, and Chilean miners have not seen a reduction of orders from the coronavirus, Prokurica said.
    • Annual oil production in the U.S. broke another record last year, rising more than 11% from 2018 to reach 12.23M bbl/day, although the annual rate of growth slipped from 17% in the prior year, the U.S. Energy Information Administration reports.
    • November set a monthly record with an average 12.86M bbl/day, according to the EIA.
    • Texas still produced the most oil of any state, accounting for more than 40% of the U.S. total at 5.07M bbl/day and setting a state record in December with 5.35M bbl/day.
    • The EIA predicts U.S. oil production will rise to 13.2M bbl/day in 2020 and to 13.6M bbl/day in 2021, with most of the growth coming out of the Permian region.
    • Visa (NYSE:Vslips 1.2% in after hours trading after reducing Q2 revenue guidance because of a sharp slowdown in its cross-border business due to lower travel-related spending because of the coronavirus outbreak.
    • Expects Q2 net revenue growth 2.5-3.5 percentage points lower than it issued on its Jan. 30, 2020 earnings call.
    • "Cross-border growth rates have deteriorated week by week since the coronavirus outbreak in China, and trends through Feb. 28, 2020 do not yet fully reflect the impact of the coronavirus spreading outside of Asia. As such, we anticipate that this deteriorating trend has not bottomed out yet," the company said in an SEC filing.
    • Plans to update outlook for future quarters and fiscal full year 2020 on Q2 earnings call in April
    • Stocks roared back from the coronavirus selloff, as investors hunted for bargains in a bet that the Federal Reserve and other major central banks would lower interest rates.
    • China reported its worst manufacturing and non-manufacturing PMI readings in history over the weekend, which promptly led to more calls for stimulus from the People's Bank of China and the Bank of Japan to join the U.S. Federal Reserve in pledging to take action.
    • A closing rally that nearly doubled gains in the final half-hour coincided with a big selloff in the Treasury market, where the 10-year yield – which earlier fell as low as 1.03% – jumped from 1.09% to 1.16%, suggesting the possibility of an asset allocation shift out of Treasurys and into stocks to fuel the late rally, as well as presumably some short-covering activity in stocks.
    • The Dow rocketed 5.1% to close 1,293 points higher and the S&P 500 jumped 4.6%, both snapping seven-session losing streaks, and the Nasdaq Composite climbed 4.5%.
    • Apple led the Dow higher with a 5.6% boost, while Merck and Walmart racked up respective 4.2% and 5.2% gains.
    • All 11 S&P sectors finished in positive territory, with nine groups surging at least 3; utilities (+5.9%), technology (+5.7%), consumer staples (+5.5%) and real estate (+5.1%) ranked as today's top performers.
    • WTI April crude oil closed +4.4% to $46.75/bbl, stabilizing a bit after dropping Friday to its lowest level since December 2018.
    • Sempra Energy (SRE +1.7%) says commercial operations have started at Cameron LNG's 4M mt/year second train in Hackberry, La., and the third train remains on track to start initial LNG production in Q2 and commercial operations in Q3 2020.
    • Phase 1 of the Cameron LNG export project includes the first three liquefaction trains, with total capacity of 12M mt/year (~1.7B cf/day) of natural gas, and the plant's first liquefaction train started commercial operations August 2019.
    • Sempra projectss its share of full-year run-rate earnings from Phase 1 to come in at $400M-$450M starting in 2021 when all three trains achieve commercial operations under Cameron LNG's tolling agreements.
    • Moody's Investors Services changes the outlook on Lennar (LEN +3.7%) to positive from stable.
    • Affirms Ba1 corporate family rating, Ba1-PD probability of default rating, and the Ba1 rating on senior unsecured notes.
    • Outlook change reflects Moody's expectations that Lennar will operate with a conservative leverage profile and maintain debt-to-capitalization below 35%, having repaid $2.2B of senior notes with cash since its acquisition of CalAtlantic two years ago.
    • Rating affects $6.9B of debt securities.
    • Honda (HMC +0.5%) plans to cut back production in Japan on a temporary basis due to sourcing issues.
    • The cutbacks at the two plants in the Saitama Prefecture are only expected to last for a few days.
    • Nissan Motor (OTCPK:NSANY) is halting Saturday and Sunday production at a subsidiary plant in Fukuoka Prefecture this month.
    • Mazda Motor (OTCPK:MMTOF) has pushed back production for several different models.
    • On the heels of six COVID-19 deaths in the Seattle area, U.S. officials are hurriedly preparing for more infections despite the still-modest number of Americans affected, 91 as of March 1. 10 states have reported confirmed or presumed cases.
    • President Trump and his task force are meeting with pharmaceutical executives today, including representatives of Johnson & Johnson (JNJ +2%), GlaxoSmithKline (GSK +3.6%), Pfizer (PFE +2.3%), Moderna (MRNA +12.5%), Inovio Pharmaceuticals (INO -4.6%) and Sanofi (SNY +3.4%), to discuss ways to accelerate the development of a vaccine although, at best, one will not be available for at least 18 months.
    • Globally, the total number of cases has topped 87K with almost 3K deaths in 60 countries.
    • Teck Resources (TECK +1.8%) is initiated with a Buy rating and $14 price target at Benchmark, which says the market is undervaluing the quality and long-term cash flow potential of Teck's coal, copper and zinc assets.
    • Expectations are low with many global mining stocks pricing in a coronavirus-induced recession, and Benchmark's Mark Levin thinks the negative backdrop provides longer-term investors with the opportunity to buy some of the best coking coal properties in the world, as well as top-tier copper and zinc assets.
    • While investors are "rightfully concerned" about the potential for a massive increase in the capital cost to build the QB2 copper project in Chile, Levin sees the coronavirus and "investor exhaustion" presenting a Teck buying opportunity.
    • Teck's average Sell Side Rating and Seeking Alpha Authors' Rating are Bullish, but its Quant Rating is Bearish.
    • Select restaurant stocks are sliding today, presumably on concerns over the impact of the coronavirus in the U.S. on traffic for March.
    • Notable decliners include Fiesta Restaurant Group (FRGI -10.1%), Carrols Restaurant Group (TAST -9.3%), Noodles (NDLS -5.2%), Dave & Buster's Entertainment (PLAY -4.8%), Del Taco Restaurants (TACO -4.7%), Chipotle (CMG -3.6%), Brinker International (EAT -2.2%), Wingstop (WING -2.1%), Red Robin Gourmet Burgers (RRGB -1.9%) and Chuy's Holdings (CHUY -2.1%).

  65. Looks like some people knew the TSLA upgrade was coming JMP securities